A-LA-CARTE OR SMORGASBORD - MULTIPRODUCT CLUBS WITH COSTLY EXCLUSION

Decentralized provision of multiple congestible and excludable goods i s generally not socially optimal if similar goods are provided. simult aneously by smorgasbord multiproduct clubs, which sell multiple club s ervices at single prices, and other clubs, which sell services at indi vidual prices. The different pricing rules for the similar club goods introduce an interclub externality: consumers have an incentive to use the services of smorgasbord multiproduct clubs at levels in excess of the socially optimal. The discrepancy between private and social valu ations for the similar services disappears if the government intervene s and equalizes prices for the similar goods across the different type s of clubs. (C) 1997 Academic Press.